Luxembourg is a major centre for cross-border life insurance (mainly unit-linked products) and for captive reinsurance. Luxembourg has been chosen by several major insurance companies as a base for launching life insurance products to be marketed throughout Europe under the EU freedom of services provision.
The country has achieved its ambition to make insurance the third pillar of its financial sector, along with investment funds and banking. Following the successful development of the reinsurance captive sector from 1984, in December 1994 the government transposed into national law the third generation of EU Directives, positioning the country as the first true pan-European centre for life insurance and the promoter of cross-border marketing of insurance products.
One of the advantages of Luxembourg is that lawmakers, decision-makers and regulators are all at close quarters and have traditionally enjoyed a relationship of mutual understanding with business. This leads to a rapid decision-making process as well as a stable and friendly business environment. Luxembourg insurance and reinsurance companies benefit from a sound legal and regulatory framework with the "Commissariat Aux Assurances" ("CAA") safeguarding the high quality of insurance/reinsurance operations through an efficient supervisory review and monitoring of the smooth running of their business.